Very large investments in renewable energy are needed as the U.S. progresses on the path of reducing dependence on fossil fuels. According to the EPA, electric utilities face cuts of 30 percent on carbon dioxide emissions by 2030 compared with 2005. On the other hand, costs continue to fall in wind and solar power generation, making them increasingly attractive energy investments.
At the recent annual convention of the Edison Electric Institute in Las Vegas, billionaire investor Warren Buffett announced that he wants to double the $15 billion that his company Berkshire Hathaway has invested so far in green energy. Berkshire has been making large investments in wind and solar power forseveral years, but Buffett is now ready to accelerate the pace of these investments. Just a few months ago, the company made the largest land-based wind power purchase ever. It has also invested in various major solar projects, such as ‘Agua Caliente’ project in Arizona.
Describing the company’s growing investments in renewable energy, which are already in the range of $15 billion, Buffett said that Berkshire has another $15 billion “ready to go” in this segment. According to Lawrence Cunningham, a professor at George Washington University, Berkshire—the fifth-largest company in the world by market value—has lately intensified its focus on rudimentary, long-lasting businesses.
The CEO of Berkshire Hathaway Energy, Greg Abel, said that the company has been able to put so much money into renewable energy because it can use tax credits to offset profit at other businesses. Units at Berkshire include auto insurer Geico, Dairy Queen, Shaw carpet and T-shirt maker Fruit of the Loom. Nick Akins, CEO of American Electric Power Co. (AEP), said that it is encouraging to know Buffett wants to invest more in renewables because the industry has a strong need for capital.
Jeff Matthews, a shareholder and author of books about Berkshire, said that Buffett is signaling that the returns are attractive in renewable energy projects. If Buffett says it, he means it, said Matthews. The whole complexion of the company has changed, he concluded.
Image Credit: Flickr via Mark Florence
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